<nobr>Jun 9, 2005</nobr>

ERIC Commends Ch. Boehner, House Retirement Leadership, on Step Toward Pension Reform

The ERISA Industry Committee (ERIC), the trade association that represents the retirement, health, and compensation plans of America’s largest employers, commended House Education and Workforce Committee Chairman John Boehner (R-OH) on today’s release of a proposal to reform pension funding rules.

“Chairman Boehner has stepped up to the plate on a difficult and complex issue that is vital to the retirement security of millions of American workers and a key part of compensation packages for thousands of American employers,” said Mark Ugoretz, president of The ERISA Industry Committee. “We acknowledge the leadership of Ways and Means Committee Chairman Bill Thomas (R-CA) along with Employer-Employee Relations Subcommittee Chairman Sam Johnson (R-TX), and Vice-Chair John Kline (R-MN) who have joined with Mr. Boehner in this proposal.”

“It appears that the Boehner bill avoids some of the worst pitfalls proposed in the original Administration approach,” added Janice Gregory, ERIC’s senior vice president. It maintains averaging of the required discount rate, which helps to provide predictability and reduce volatility in required contributions and also times contributions so that cash is not diverted during a downturn. It does not include provisions that tie funding requirements to a company’s investment grade; and it retains a modified form of credit balances which are essential to allowing companies to pre-fund their contributions during good times.”

“The final test of any pension reform is whether it succeeds in balancing the need to protect participants with rules that make it affordable for employers to maintain pension plans over time and that encourage them to do so – the formula originally adopted by the framers of the 1974 Employee Retirement Income Security Act,” Ugoretz said. “We very much look forward to studying the bill in detail with these criteria and ERIC’s own proposal in mind.”

According to Ugoretz, the debate about pension reform to date has been skewed not toward protecting participants or encouraging defined benefit pension plans but to protecting the Pension Benefit Guaranty Corporation which has adopted ultra conservative assumptions in justifying the alleged threat to its own finances. “We understand the fine line the Chairman had to walk and appreciate his making some hard decisions and moving the debate forward,” said Ugoretz.

According to Ugoretz, how the bill will address the important issue of cash balance and other hybrid plans will be critical to the future of disciplined retirement savings. That provision has been in fluctuation in the past few days.

For further information contact Brendan LaCivita, Director of Communications (202-789-1400; blacivita@eric.org)

Text Files:

Boehner Bill Summary

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